| Author | Message | ||
     Hootowl |
Lower than what our service members pay? I doubt it. They don't pay the military shit. Many active duty are below the poverty line, and pay no federal taxes. Also, not all of their income is taxable. They only get taxed on pay, not allowances, and for most, allowances are a big part of their paycheck. IMHO, active duty pay shouldn't be taxed at all. I would have loved to be in a 15% tax bracket when I was in, that would have meant I was making a decent amount of money. I pay more in taxes each year now than I MADE per year in the military. Edited for spelling...spelling something wrong that is another word spelled correctly still passes muster with the spell checker. Why can't it read my mind? (Message edited by hootowl on January 19, 2012) | ||
| P_squared |
Even if it is a fake offering. It is still better than what the GOP is trying to sell us! A fake offering is still a fake offering. The GOP has offered 25 different Job bills, all stalled in the Senate. (Source: http://www.speaker.gov/Blog/?postid=271218) This is nothing more than election year politics. More jobs = More income taxes, er, "revenue" to the Fed. Again, we don't have a "revenue" problem, we have a SPENDING problem. Taxing/taking more from the "rich" isn't going to fix that problem. Instead of being indignant that "the rich" aren't paying more, why doesn't anyone ask why the hell we can't pay LESS? Why does almost half of the population pay NOTHING? | ||
| Wolfridgerider |
What up with the pipeline? Why would you say no to that? | ||
| Union_man |
I wouldn't!!! I think it was a mistake to stop it. | ||
| Boltrider |
Maybe Warren Buffet can step up and save the pipeline. But he would do that only after he finished paying his fair share, of course. | ||
| Strokizator |
Can somebody explain to me how any person who is paying exactly what the law demands can be vilified for "not paying his fair share"? Anyone who says they are not taxed enough can remedy that by simply writing a check to the IRS. You don't need a news conference for that. Of course they then couldn't claim to be better than everyone else. | ||
| Sifo |
I still want to hear what is a fair percentage of people that should have to pay SOMETHING in taxes. I think that should be far more than 50%. | ||
| Ft_bstrd |
So the going on about Romney is that he ONLY paid 15% tax rate. I'm assuming that it's because most of his income is capital gains. What people are losing sight of is that he first had to have EARNED income before he had capital to invest. This means that he has paid taxes TWICE on that income, once at 35%+ and then again at 15%. So he made $500,000 in earned income and paid $175,000 in taxes. He then took the $325,000 net income and invested it. Let's say he earned 10% on that money. That's $32,500 in earnings. At a 15% tax rate, he paid another $4,875. So now he has $352,625 in capital and has paid $179,875 in taxes, 35.975% He invests the $352,625 and earnes 10%. That's $35,263 in profit and pays $5,289 in taxes. That's $185,164 in total taxes, 37%. So now he invests the $382,599 and earns 10%, $38,260. Pays taxes of $5,739. That's total taxes paid of $190,903, 38.18%. The next year, $415,120 capital. $41,120 earnings. $6,226 in taxes. $197,130 total taxes paid, 39.43%. So Romney, under this arrangement, has Paid almost a 40% tax rate on the same $500,000 in income EARNED. His total capital pool has risen from $325,000 to $450,014. He has paid $22,129 in capital gains taxes. Of the $125,014 earned, he has paid 17.7% in taxes. This is just 4 years of investing. Imagine the aggregate taxes paid over 20 or thirty years. | ||
| Benm2 |
Ft - that double-taxation thing is a bit tired. There are a substantial number of people with the ability to engineer their pay to consist of mostly capital gains taxes. It takes a bit of planning, but it can be done. The ones that really get whacked with the double-taxation ARE the ones that DID earn it first as regular income, the ones in the gap between those who pay nothing (about 50%) and those who can have their salaries engineered (less than 1%, I would guess). It's certainly a goofy system, but I would bet Mr. Romney was in the category of having engineered his income. | ||
| Ft_bstrd |
There are a substantial number of people with the ability to engineer their pay to consist of mostly capital gains taxes. Please, explain how one does this. | ||
| Union_man |
Here FT... http://nakedlaw.avvo.com/2011/03/5-sneaky-ways-the -super-rich-avoid-taxes/ | ||
| Ft_bstrd |
UM, Your link doesn't answer the question. How does one "engineer their pay to consist mostly [of] capital gains taxes"? There are exactly ZERO "sneaky ways the super rich avoid taxes" that you or I couldn't utilize. You could buy a tax exempt bond tomorrow. Go to the nearest bank and there are probably 5 people in the lobby who could help you do it. Capital gains is the question at hand. I'm waiting for the answer. Gift Giving? You could give money to anyone you want. Charitable Donations? You could get the exact same benefits yourself tomorrow. Call up your local university, and they can set you up. Vacation Homes/Yachts? So I have to buy one, live in it for 14 days out of the year, hope it appreciates, and sell it. What do I get? I get to pay 15% capital gains on the appreciation. Sounds like a great deal. Still waiting...... | ||
| Sifo |
Union_man, That does nothing to explain how you engineer their pay to consist of mostly capital gains. Here's a hint... You can't! | ||
| Ft_bstrd |
I can't wait till the day (and the date is now cast in stone) I start living off dividend income and capital gains. You and every other retiree. Sad that class envy blinds people to the simplest of tax principles. I guess no one here expects to ever accumulate any wealth. Pity that. | ||
| Ft_bstrd |
Shhhhhh Sifo. Don't give them any hints.  | ||
| Ft_bstrd |
Buffett is no longer satisfied with taking over companies. He has moved onto countries. What good is being the richest man in America if you can drive it around the block now and then? | ||
| Johnnymceldoo |
Union man, will you offer me half of your pension since I dont have one myself. How is it fair for you to have one and not me? Ive got a feeling your much better off than me and I dont like that. Its just not fair. | ||
| Benm2 |
http://www.mbbp.com/resources/tax/restricted_stock .html Just to quote directly from the above link:
So you are saying that careful use of incentive stock options and strike prices cannot be negotiated as part of a compensation package? | ||
| Ferris_von_bueller |
Gee, I wonder how people become wealthy paying all those damn taxes...lol. | ||
| Ft_bstrd |
Just to quote directly from the above link: -------------------------------------------------- ------------------------------ quote: "Corporate equity compensation awards are typically structured as either grants of stock options or issuances of restricted stock. In general, the goal of the award recipient is to defer his or her out-of-pocket purchase price and tax costs related to the award for as long as possible and to maximize the portion of his or her income from the award that is taxable at long-term capital gain rates. -------------------------------------------------- ------------------------------ So you are saying that careful use of incentive stock options and strike prices cannot be negotiated as part of a compensation package? There are TWO forms of compensation at work in the stock grant, earned income and capital gains. When a stock grant is issued, the value of the stock at the time of issue is treated as earned income and taxed at regular tax rates (35% for highly compensated employees). Once the stock is in the possession of the employee any gains in value above the value at time of grant is treated as capital gain as it would be in any other owned stock appreciation. There is no way to structure or "engineer" the original stock grant to be treated as anything other than earned income. In a stock option (most are Non-statutory Stock Options), the employee is granted the ability to purchase shares at a specific price. Most options are exercised as "cashless" meaning that at exercise, the funds to purchase the shares are "loaned" to the employee, the option exercised, and the loan repaid at the sale of the stock. Under Section 83 of the tax code. the immediate value of the stock option is treated as earned income. If the stock is held and additional gains are realized any additional gains would then be treated as capital gains. All of the value, though, is contingent upon an increase in the stock price. No one would "engineer" cash in hand for stock appreciation that may or may not happen just to avoid paying the tax. Stock options granted "in the money" (strike price below the current price) are taxed as earned income. How else would someone "engineer" income so that it is taxed at capital gains rates? | ||
| Benm2 |
I don't think that the options are always done as the cashless exercise - especially for highly compensated employees. | ||
| Ft_bstrd |
I don't think that the options are always done as the cashless exercise Most are. Because of the new reporting, options aren't the vogue they once were. Under the Black-Scholes reporting requirements, businesses can no longer grant options off the books. Options also fell out of favor because of the short term value propping that was going on. Jack up the value of the company, exercise your options, run like hell before anyone catches on. As such, stock grants are now more popular. Compensation committees seen to "align executive compensation with the objectives of the shareholders". This means long term appreciation. Stock grants, particularly those with long restriction periods, force executives to manage long term company appreciation instead of short term price hikes. Again, how does one "engineer" compensation so that it is paid as capital gains? | ||
| Benm2 |
Regarding the cashless exercise - I'm not a CEO, and I can say right now that IF I got options, I would do what I could to make sure I exercised them as long-term capital gains. It would be a stretch for me to front the money, but I'd much rather have that income as long-term capital gains. I'm only saying that those that CAN front the money more easily are likely to do so. Regarding the short-term value propping - I would bet that still goes on. Probably non in the S&P 500, but in other areas. I've seen some small to mid-cap stocks do some really strange things for no apparent reason. Also - regarding alignment of executive compensation with the objectives of shareholders - managing long term appreciation makes the risk of holding option grants for the required time to get long term capital gains part of the game. I need to get back to work, but I would be interested to see what's out there regarding executive comp packages for some public companies. | ||
| Ft_bstrd |
Regarding the cashless exercise - I'm not a CEO, and I can say right now that IF I got options, I would do what I could to make sure I exercised them as long-term capital gains. It would be a stretch for me to front the money, but I'd much rather have that income as long-term capital gains. I'm only saying that those that CAN front the money more easily are likely to do so. It doesn't matter whether you front the money or not. 100% of the gains at exercise are going to be treated as regular income. Regarding the short-term value propping - I would bet that still goes on. Probably non in the S&P 500, but in other areas. I've seen some small to mid-cap stocks do some really strange things for no apparent reason. I'm sure there is some, but the incentive to do so is removed. If you prop up the value, eventually it will come out. Since there are MUCH fewer option grants (vs. what there was in the 90's), short term price gains don't help the executives. Also - regarding alignment of executive compensation with the objectives of shareholders - managing long term appreciation makes the risk of holding option grants for the required time to get long term capital gains part of the game. It doesn't really matter how long you hold the options. 100% of the gains will be treated as regular earned income and not capital gains under Section 83 of the tax code. This is why most exercise the options as soon as they can and then reinvest. That was all the gains after that point would be treated as capital gains. Long term holding of in the money options makes the problem worse not better. I need to get back to work, but I would be interested to see what's out there regarding executive comp packages for some public companies. Any time you want to see it simply look up the Annual Statement of any publicly traded company. Here is the annual statement (10-K) for HD: http://www.harley-davidson.com/en_US/Media/downloa ds/Annual_Reports/2010/10k_2010.pdf Executive Compensation Plans are on page 127. I found it interesting that HD requires every officer from the Director level up to own a certain number of shares outright. | ||
| Benm2 |
Note - Unionman's link has become infected - don't click on it! Ft - the link below (clean when I went): http://www.smartmoney.com/personal-finance/taxes/t axes-on-incentive-stock-options-12196/ Quoting the article, in paragraph 4:
Are you saying that this information is wrong? It wouldn't be the first time that the interweb were wrong, but from what I read there it seems at odds with what you're saying. | ||
| Union_man |
Sorry about the link.  Not intentional!!! | ||
| Sifo |
Are you saying that this information is wrong? More incomplete than wrong. http://www.tax-business.com/stock-op.htm
| ||
| Dennis_c |
All I want to know is how are the jobs working out with the rich paying lower taxes in the last 9 yrs. with the RNC | ||
| Ft_bstrd |
Are you saying that this information is wrong? It wouldn't be the first time that the interweb were wrong, but from what I read there it seems at odds with what you're saying. There are TWO types of stock option under the tax code. The first is the NSO (Non-statutory Stock Option) and the ISO (Incentive Stock Option). They are taxed differently. What is described in the article could be an ISO, but the details aren't complete. Are the shares restricted or not after exercise? If it isn't restricted, then the taxation could be subject to AMT negating the capital gains benefits. The AMT tax requires the gain at exercise to be taxed as ordinary income. The ONLY way that the gains would not be treated as ordinary income is for the executive to put up his own capital, purchase the shares and hold those shares for two full years without the ability to sell or exchange those shares. This is all the while the stock is subject to market volatility. If the executive is able to secure a loan, he would have to do so from an outside (non-employer) source since Sarbanes-Oxley prohibits loans between employers and employees in publicly traded companies. So what is the going interest rate for a personal loan collateralized by company stock for two years? In the HD annual statement, the shares vest over a three year period, but are unrestricted thereafter. So it is either a Non-statutory Stock Option Plan and subject to taxation under Section 83 of the tax code or it is an unrestricted Incentive Stock Option Plan whereby the gains are taxable as regular income under AMT. The real determiner of which option type is used is deductibility. NSOs ARE deductible to the corporation. ISOs are NOT. Corporations rarely issue non-deductible stock options. How does one "engineer" income so that it is taxed at capital gains rates? | ||
| Ft_bstrd |
All I want to know is how are the jobs working out with the rich paying lower taxes in the last 9 yrs. with the RNC What does the tax rate of the "rich" have to do with jobs? In other words, how would the wealthy paying higher taxes benefit someone trying to find a job? |
